The front end of the G10 curves are well offered with the equity rally but the back end remains well supported.
There are still a lot of buyers for the Bank of Canada meeting. 55 bps are priced in the FX market for USDCAD
2Y Treasury yield rose while those for the 10Y slipped, resulting in the tightest spread between the pair, as investors trimmed long-term growth expectations even as they expected the Federal Reserve to stick to two-three additional rate increases for the remainder of 2018.
10Y German government bond yield fell 1.8 Bps, resulting sovereign paper as a proxy for the Eurozone’s economy.
Dow (+213 points) and S&P 500 (+28 points) stocks closed solidly higher on Tuesday, led by a rally in technology and consumer discretionary stocks. Investors welcomed a round of better-than-expected earnings reports and solid economic data releases. All three indices ended back above their 50DMA, a closely watched gauge for the short-term price momentum in a security.
Netflix Inc. NFLX, shot up 9.2% and closed at a record a day after the streaming-media company reported first-quarter results that blew past Wall Street forecasts. The stock was the biggest percentage gainer in the S&P, and it supported the overall consumer-discretionary sector.
On earnings, UnitedHealth Group UNH, rose 3.6% after it raised its outlook and reported a sharp increase in profits. The stock was one of the biggest boosts among Dow components. While, General Electric Co. GE, jumped 3.5%. The troubled industrial conglomerate is scheduled to report results later this week.
On the downside, Johnson & Johnson JNJ, slid 0.9% lower even as profit and revenue beat forecasts and the pharmaceutical and consumer products group lifted its sales outlook. Goldman Sachs GS, fell 1.7% despite reporting results that were sharply ahead of expectations.
Technology companies rallied on Tuesday. Twitter Inc. TWTR, shares surged 11% after Morgan Stanley analysts upgraded the stock to equal-weight from underweight. Shares of Alphabet Inc. GOOG, gained 3.2% while Microsoft Corp. MSFT, rose 2% and Apple Inc. AAPL, added 1.4%.
European stocks erased an earlier loss and ended higher Tuesday after the pound pulled back from its highest level since the Brexit vote, following a mixed report on the British labour market. UK FTSE 100 ( +27 points) and DAX closed positive (+194 points), while CAC (+40 points).
Looking at individual stocks, Associated British Foods PLC (ABF), jumped 4.1% after the Primark parent said first-half pretax profit declined, but also backed its full-year guidance.
In pharmaceuticals, Genmab AS (GEN), rallied 8.7% after the Danish pharmaceutical company reported stronger-than-expected first-quarter sales of its Darzalex drug. On the other hand, Bayer AG (BAYN), added 2.8% after news its major shareholder Temasek will boost its stake in the German drug and chemicals maker.
Basic resources stocks — with their heavy exposure to China — were among the top performing sectors Tuesday, jumping 1.3% following robust GDP data from Beijing. The economy grew at 6.8% during the first three months of 2018, topping expectations. Polymetal, ArcelorMittal and Anglo American were among those leading the sectoral gains, all closing up 2% or more.
Hang Seng Index (HSI) stocks continued the fourth day of decline. At close, Hang Seng Index headed south 252 points or 0.8% to 30,062. Investors digested the release of a raft of China data, including expectation-topping first-quarter GDP growth. The dollar also eased further while oil prices pared some overnight losses.
US Department of Commerce issued a statement on 16 April that the government has imposed a denial of export privileges on ZTE Corporation (763.HK) against acquiring sensitive technology from American enterprises for a term of seven years, due to its violation of sanctioning injunction. Shares were suspended, lasted traded was at 25.60.
Handset equipment stocks went subdued. AAC TECH (2018.HK) and SUNNY OPTICAL (02382.HK) slumped 4.6% and 5.8% and became the worst-performing blue-chippers. COWELL (01415.HK), BYD ELECTRONIC (00285.HK) and Q TECH (01478.HK) plummeted 3.6%-6.4%.
Pharmaceutical stocks mirrored the downtrend. Names like WUXI BIO (2269.HK), CSPC PHARMA (1093.HK), TRAD CHI MED (570.HK), SINO BIOPHARM (1177.HK) and FOSUN PHARMA (2196.HK) nosedived 2.5%-5.9%.